The document provides an overview of the history and current structure of the banking sector in Bangladesh. It discusses the major developments in the sector from the British colonial period through independence and modern reforms. The key events summarized are: the establishment of the first banks in the 1800s under British rule; the nationalization of banks after independence in 1972; the gradual introduction of private banks beginning in 1983; and the current structure which includes nationalized commercial banks, private commercial banks, and specialized banks regulated by the Bangladesh Bank as the central bank.
The document provides an overview of the history and current structure of the banking sector in Bangladesh. It discusses the major developments in the sector from the British colonial period through independence and modern reforms. The key events summarized are: the establishment of the first banks in the 1800s under British rule; the nationalization of banks after independence in 1972; the gradual introduction of private banks beginning in 1983; and the current structure which includes nationalized commercial banks, private commercial banks, and specialized banks regulated by the Bangladesh Bank as the central bank.
The document provides an overview of the history and current structure of the banking sector in Bangladesh. It discusses the major developments in the sector from the British colonial period through independence and modern reforms. The key events summarized are: the establishment of the first banks in the 1800s under British rule; the nationalization of banks after independence in 1972; the gradual introduction of private banks beginning in 1983; and the current structure which includes nationalized commercial banks, private commercial banks, and specialized banks regulated by the Bangladesh Bank as the central bank.
The document provides an overview of the history and current structure of the banking sector in Bangladesh. It discusses the major developments in the sector from the British colonial period through independence and modern reforms. The key events summarized are: the establishment of the first banks in the 1800s under British rule; the nationalization of banks after independence in 1972; the gradual introduction of private banks beginning in 1983; and the current structure which includes nationalized commercial banks, private commercial banks, and specialized banks regulated by the Bangladesh Bank as the central bank.
Trans-National Banks (TNBs). The commercial banking system put on vital role in Bangladesh's
financial sector. Bangladesh Bank is the Central Bank of Bangladesh and the principal regulator
of the sector.
History of Banking and Composition in Bangladesh
Modern banking system plays a vital role for a nation’s economic development. Over the last few
years the banking world has been undergoing a lot of changes due to deregulation, technological
innovations, globalization etc. These changes in the banking system also brought revolutionary
changes in a country’s economy. Present world is changing rapidly to face the challenge of
competitive free market economy. It is well recognized that there is an urgent need for better,
qualified management and better-trained staff in the dynamic global financial market. Bangladesh
is no exceptions of this trend. Banking Sector in Bangladesh is facing challenges from different
angles though its prospect is bright in the future.
Before liberation
Bangladesh inherited its banking structure from the British regime and had 49 banks and other
financial institutions before the Partition of India in 1947. The Dhaka Bank established in 1806
was the first commercial bank in the Bangladesh region of British India. Bengal Bank, the first
British-Patronized modern bank established in India in 1784, had opened its two branches in 1873 in Sirajganj and Chittagong of Bangladesh region. Later in 1862, the Bengal Bank Purchased the
Dhaka Bank and opened its first branch in Dhaka in the same year by reconstituting and merging
the Dhaka Bank. Thereafter, another branch of Bengal Bank was opened in Chandpur in 1900. A
number of other branches of Bengal Bank were opened in this region and some branches had been
closed in Course of time. There were six other branches of Bengal Bank in operation in the territory
of Bangladesh until the Partition of British-India in 1947 and these branches were at Chittagong
(1906), Mymensing (1922), Rangpur (1923), Chandpur (1924), and Narayanganj (1926).
Following the emergence of Pakistan in 1947, Stat Bank of Pakistan, the Central Bank of the
country, came into being in July 1948. Later, the National bank of Pakistan, a strong commercial
bank was set up in 1949. In all, 36 scheduled commercial banks were in operation in the whole
Pakistan until 1971. Pakistanis owned most of these banks and only three of them namely, National
Bank of Pakistan, Habib Bank Ltd. and the Australasia Bank Ltd, had one branch of each in East
Pakistan in 1949. During 1950-58, there other Pakistani-owned banks, Premier Bank Ltd., Bank
of Bhowalpur Ltd. and Muslim Commercial Bank, had opened their branch in East Pakistan. Four
Pakistan-owned banks, the United Bank Ltd., Union Bank Ltd., Standard Bank Ltd. and the
commerce Bank Ltd. Conducted banking business in the Province during 1959-1965.But all of
them Had their headquarters in west Pakistan. East Pakistan had only two banks Owned by local
business groups white headquarters in Dhaka. These were the Eastern Mercantile Bank Ltd.
(Presently Pubali Bank Ltd.) and Eastern Banking Corporation Ltd. (Presently Uttara Bank Ltd.) After liberation:
In the beginning of 1971, there were 1130 branches of 12 banks in operation in East Pakistan. The
foundation of independent banking system in Bangladesh was laid through the establishment of
the Bangladesh Bank in 1972 by the Presidential Order No. 127of 1972 (which took effect on 16th
December,1971). Through the Order, the eastern branch of the former State Bank of Pakistan at
Dhaka was renamed as the Bangladesh Bank as a full-fledged office of the central bank of
Bangladesh and the entire undertaking of the State Bank of Pakistan in, and in relation to
Bangladesh has been delivered to the Bank.
Bangladesh Bank has been entrusted all of the traditional central banking functions including the
sole responsibilities of issuing currency, Keeping the reserves, formulating and managing the
monetary and credit policy, regulating the banking system, stabilizing domestic and external
monetary value, preserving the par value of Bangladesh Taka, fostering economic growth and
development and the development of the country’s market.
The Bangladesh Banks (Nationalization) Order enacted in 1972 nationalized all banks except
foreign ones. Six nationalized banks were formed through merging the existing banks of the
period.
Development of banking sector:
The rate of growth and development of banking sector in the country was extremely slow until
1983 when the government allowed to establish private banks and started denationalization
process: initially, the Uttara Bank in the same year and thereafter, the Pubali Bank, and the Rupali
Bank in 1986. Growth pattern of banks during the period 1973-1983.
There were no domestic private commercial banks in Bangladesh until 1982; When the Arab-
Bangladesh Bank Ltd. commenced private commercial banking in the country. Five more
commercial banks came up in 1983 and initiated a moderate growth in banking financial
institutions. Despite slow growth in number of individual banks, there had been a relatively higher
growth of branches of nationalized commercial banks (NCBs) during 1973-83. There number had
increased from 1512 in 1973-74 to 4603 in 1982-83.
Financial sector reforms to strengthen the regulatory and supervisory framework for banks made
head way in 2006 although at a slower than expected pace. Overall health of the banking system
showed improvement since 2002 as the gross Non-performing Loans (NPL) declined from 28
percent to 14 percent while net NPL (less Provision) reduced to 8 percent from 21 percent. This
led significant improvement in the profitability ratios. Although the Private Commercial Banks
(PCB) NPL ratio registered a record low of 6 percent, the four Nationalized Commercial Banks
(NCB) position are still weak and showed very high NPL at 25 percent. The NCBs have large
capital shortfalls with a risk-weighted capital asset ratio of just 0.5 percent (June 2006) as against
the required 9 percent. For the PCBs risk-weighted capital asset ratio stood at 10 percent.
Bangladesh Bank issued a good number of prudential guidelines during the year 2006 and the
first quarter of 2007 which among others relate to:
• Rationalization of prudential norms for loan classification and provisioning,
• Policy for rescheduling of loans,
• Designing and enforcing an "integrated credit risk grading manual",
• Credit rating of the banks, and
• Revisions to the make-up of Tier-2 capital.
Besides, recent decision of the Government to corporative the remaining three NCBs along with
the initiative to sale the Rupali Bank are bound to usher in changes in the banking sector
competitiveness aspect. Bangladesh Bank has also taken up the task of implementing the Basel II
capital accord. Further, the recent enactment of the Micro-credit Regulatory Authority Act
(MRAA) for the regulation of the Micro Finance Institutions (MFI) has been a major development
in the year 2006. Since 1998 CAMEL rating of banks gradually improved and in 2006 Bangladesh
Bank updated this rating model by incorporating the market risk and the new model is known as
CAMELS.
Modern banks play an important part in promoting economic development of a country. Banks
provide necessary funds for executing various programs underway in the process of economic
development. They collect savings of large masses of people scattered through out the country,
which in the absence of banks would have remained idle and unproductive. These scattered
amounts are collected, pooled together and made available to commerce and industry for meeting
the requirements. Economy of Bangladesh is in the group of world’s most underdeveloped
economics. One of the reasons may be its underdeveloped banking system. Government as well as
different international organizations have also identified that underdeveloped banking system
causes some obstacles to the process of economic development. So they have highly recommended
for reforming financial sector. Since, 1990, Bangladesh government has taken a lot of financial
sector reform measurements for making financial sector as well as banking sector more transparent
formulation and implementation of these reform activities has also been participated by different
international organization like world Bank, IMF etc.
Current Structure of Banks in Bangladesh
Bangladesh Bank (BB) has been working as the central bank since the country's independence. Its
prime jobs include issuing of currency, maintaining foreign exchange reserve and providing
transaction facilities of all public monetary matters. BB is also responsible for planning the
government's monetary policy and implementing it thereby. The BB has a governing body
comprising of nine members with the Governor as its chief. Apart from the head office in Dhaka,
it has nine more branches, of which two in Dhaka and one each in Chittagong, Rajshahi, Khulna,
Bogra, Sylhet, Rangpur and Barisal. Following is the country’s banking system as on 29th April,
2010
Nationalised Commercial Banks (NCBs)
1. Sonali Bank
2. Janata Bank
3. Agrani Bank
4. Rupali Bank
Local Private Commercial Banks (PCBs)
1.Pubali Bank
2.Uttara Bank
3.National Bank Ltd.
4.The City Bank Ltd.
5.United Commercial Bank Ltd.
6. Arab Bangladesh Bank Ltd.
7.IFIC Bank Ltd.
8.Islami bank Bangladesh Ltd.
9.Al Baraka Bank Bangladesh Ltd.
10.Eastern Bank Ltd.
11.National Credit & Commerce Bank Ltd.
12.Prime Bank Ltd.
13.South East Bank Ltd.
14.Dhaka Bank Ltd.
15.Al-Arafah Islami Bank Ltd.
16.Social Investment Bank Ltd.
17.Dutch-Bangla Bank Ltd.
18.Mercantile Bank Ltd.
19.Standard Bank Ltd.
20.One Bank Ltd.
21.EXIM Bank
22.Bangladesh Commerce Bank Ltd.
23.Mutual Trust Bank Ltd.
24.First Security Bank Ltd.
25.The Premier Bank Ltd.
26.Bank Asia Ltd.
27.The Trust Bank Ltd.
28. Shah Jalal Bank Limited (Based on Islamic Shariah) etc.
Foreign Banks
1.American Express Bank
2.Standard Chartered Grindlays Bank
3.Habib Bank Ltd.
4.State Bank Of India
5.Credit Agricole Indosuez (The Bank)
6.National Bank of Pakistan
7.Muslim Commercial Bank Ltd.
8.City Bank NA
9.Hanvit Bank Ltd.
10.HSBC Ltd.
11.Shamil Islami Bank Of Bahrain EC
12.Standard Chartered Bank
Development Banks
1.Bangladesh Krishi Bank
2.RajshahiKrishiUnnayan Bank
3.Bangladesh Shilpa Bank
4.Bangladesh Shilpa Rin Sangstha
5.Bank of Small Industries & Commerce Bangladesh Ltd.
Other
1.Ansar VDP Unnayan Bank
2.Bangladesh Samabai Bank Ltd. (BSBL)
3.Grameen Bank
4.Karmasansthan Bank Asset and liability of different Commercial bank:
Islami Bank Bangladesh Ltd
The establishment of Islami Bank Bangladesh Limited on March 13, 1983, is the true reflection of
this inner urge of its people, which started functioning with effect from March 30, 1983. This Bank
is the first of its kind in Southeast Asia. It is committed to conduct all banking and investment
activities on the basis of interest-free profit-loss sharing system. In doing so, it has unveiled a new
horizon and ushered in a new silver lining of hope towards materializing a long cherished dream
of the people of Bangladesh for doing their banking transactions in line with what is prescribed by
Islam. With the active co-operation and participation of Islamic Development Bank (IDB) and
some other Islamic banks, financial institutions, government bodies and eminent personalities of
the Middle East and the Gulf countries, Islami Bank Bangladesh Limited has by now earned the
unique position of a leading private commercial bank in Bangladesh.
With 251 branches and 10,068 staffs, IBBL is the largest private banking network in Bangladesh.
According third quarter report 2017.
Total Liability = 799,770,923,715
Total Equity = 50,625,803,935
6%
Liability Equity
94%
BRAC Bank Ltd:
BRAC Bank Ltd. is a scheduled commercial bank in Bangladesh. It established in Bangladesh
under the Banking Companies Act, 1991 and incorporated as private limited company on 20 May
1999 under the Companies Act, 1994. BRAC Bank will be a unique organization in Bangladesh.
The primary objective of the Bank is to provide all kinds of banking business. At the very
beginning the Bank faced some legal obligation because the High Court of Bangladesh 8.
Organizational Structure
BRAC Bank Limited has two sets of reporting lines, one that reports directly to the MD and another
that reports to the DMD. MD is the representative of the Board of Directors as well as responsible
for all the business decisions taken by the bank. The Support Manager assists him. Under him
work the Heads of the Business and some of the Support Units. They are: Head of SME Banking,
Head of Retail Banking, Head of Corporate Banking, Head of Probashi Banking, Head of Treasury
& Financial Institutions, Head of Marketing & Corporate Affairs, Head of Enterprise Risk Management, Head of Human Resources, Head of Financial Administration,
Company Secretary & Head of Regulatory & Internal Control, Head of Impaired Assets
Management, Manager-Complaint Handling Cell & Credit Inspector. There is another part of the
Organogram, which deals with the reporting line of Deputy Managing Director & COO. This line
constitutes of the Heads of the Support Units. The Units are: Head of Retail Banking Operation,
Head of Corporate Banking Operations, Head of SME Banking Operations, Head of Probashi
Banking Operations, Senior Manager-Card Operations, Head of Business Solutions, Head of
Technology, Head of General Infrastructure Services, Head of Central Operations, Senior
Manager-Call Centre, Senior Manager, Project Admin, Service Quality, Operations Risk Mgt. &
Operations MIS.
Total Liability = 263510 m BDT
Total Equity = 25991 m BDT
Liability Equity Bank Asia Limited
Bank Asia Limited is a scheduled commercial bank in the private sector established under the
Bank Company Act 1991 and incorporated in Bangladesh as a public limited company under the
Companies Act 1994 to carry out banking business in Bangladesh. Bank Asia Limited acquired
the business of Bank of Nova Scotia, Dhaka in the year 2001 and at the beginning of the year 2002
the Bank also acquired the Bangladesh Operation of Muslim Commercial Bank Limited (MCBL),
a bank incorporated in Pakistan, having two branches at Dhaka and Chittagong with one booth at
Dhaka. The Bank carries its banking activities through nineteen branches in the country. Bank
Asia customers have access to 20 ATMs as a member of ETN. Under the ATM network the Stellar
Online Banking Software enables direct linking of a client’s account, without the requirement of
a separate account. The Bank is also in the process of setting up its own ATM network with a view
to providing retail banking services. According to 1st Quarter Report 2018.
Total Liability = 267,681,719,328
Total Equity = 21,651,988,328
7%
Liability Equity 93% Janata Bank Limited
Janata Bank Limited is one of the biggest commercial banks of the country. It’s a state owned bank
that was formed just after liberation of Bangladesh. In fact it was a combination of two smaller
banks namely United Bank Limited and Union Bank Limited. The bank has a very wide network
of 872 branches all over the country. At present its authorized capital is BDT 20,000 million and
paid up capital is BDT 5,000 million. Janata Bank was converted to a limited company on 15
November, 2007. JBL provides all services of a commercial bank. Moreover it serves its clients
with most modern banking products.
Services: Janata Bank provides all commercial banking services to its clients focusing on the
national interest and sustainable growth. The major fields of its activities may be represented as
below:
Retail/Personal Banking
Credit programs
Micro Enterprises & Special Credit
Rural Banking / Credit Program
International Banking
Foreign Remittance and NRB Banking
Total Asset = 1,201,563,310,343
Total Liability = 1,134,444,098,707
Total Equity = 67,119,211,636
Sonali Bank
National Bank of Pakistan was the largest commercial bank in the then East Pakistan. After
liberation of Bangladesh in 1971, this bank along with two smaller banks, Premier Bank and Bank
of Bahawalpur were merged into Sonali Bank. The bank was nationalized under Government order
P.O.26, 1972.
This bank was transformed into a Public Limited Company under 100% ownership of Government
and started functioning as Sonali Bank Limited on 15 November, 2007.
Sonali Bank has an authorized capital of BDT 10 billion and has BDT 9 billion of paid up capital.
With 1193 branches including two overseas branches, 3 subsidiaries and 3 representative offices,
Sonali is by far the largest commercial bank of the country.
Since its emerge as a nationalized bank in 1972, it is discharging its duties in building the economy
of the nation and till now it’s carrying out the social commitment for which it was entrusted.
General Banking Sonali Bank provides all general banking services to its clients through its
extensive network all over the country. Savings and Current accounts, money transfer through
Demand Draft, Pay Order, Mail Transfer, and Telegraphic Transfer etc. are regular functions of
this bank. In addition it receives utility bills from consumers. According financial Statement
